Last month, the IMF released a PIN, which included a comment on PDIC legislation.
The reason IMF Directors gave for favoring the proposal to increase bank deposit insurance is a contingent one. It is a means of addressing “financial sector vulnerability.”
Here’s what the IMF actually said:
Directors supported the proposed increase in the Philippines Deposit Insurance Corporation (PDIC) deposit coverage, and noted the importance of allowing for flexibility to temporarily raise it further if the financial sector experiences high stress levels. Recapitalization of the PDIC will be key to support the enhanced deposit protection.”
In the environment where pre-need and rural banks are candidates for Ponzi-type schemes, I considered that raising the PDIC deposit insurance limit was unwise.